the principle that there is an inverse relationship between the price of the good and the quantity buyers are willing to purchase ceteris paribus

Term

demand curve

Definition

is formed by the line connecting the possible prices and quantities purchased. You can find the quantity demanded at any price by moving along the curve

Term

demand

Definition

demand is a curve or schedule showing the various quantities of a product consumers are willing to purchase at possible prices during a specified period of time ceteris paribus

Term

change in quantity demanded

Definition

a movement between points along a stationary demand curve ceteris paribusresults solely from change in the price

Term

nonprice determinants of demand

Definition

factors that aren't the price but that influence the position of the demand curvenumber of buyers, tastes and preferences, income, expectations of future changes in prices income and availability of goods, prices of related goods

Term

on a demand curve graph a decrease in prices causes

Definition

an increase in the quantity demanded (movement along the demand curve)

Term

on a demand curve graph a change in a nonprice determinant causes

Definition

an increase in demand (shifting the demand curve)

Term

normal good

Definition

any good for which there is a direct relationship between changes in income and its demand curve

Term

inferior good

Definition

any good for which there is an inverse relationship between changes in income and its demand curve

Term

substitute good

Definition

a good that competes with another good for consumer purchase. as a result there is a direct relationship between a price change for one good and the demand for its competitor good

Term

complementary good

Definition

a good that is jointly consumed with another good. as a result there is an inverse relationship between the price change for one good and the demand for the go together good

Term

law of supply

Definition

the relationship between ranges of possible prices and quantities suppliedthe principle that there is a direct relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period ceteris paribus

Term

supply

Definition

a curve or schedule showing the various quantities of a product sellers are willing to produce and offer for sale at possible prices during a specific time, ceteris paribus

Term

change in quantity supplied

Definition

a movement between points along a stationary supply curve, ceteris paribus

Term

change in supply

Definition

an increase or a decrease in the quantity supplied at each possible price. An increase in supply is a rightward shift in the entire supply curve. A decrease in supply is a leftward shift in the entire supply curve

Term

on a supply curve graph an increase in price leads to what

Definition

an increase in quantity supplied, a shift on the supply curve

Term

on a supply curve graph a change in nonprice determinants leads to what

Definition

an increase in supply, a shift of the supply curve

Term

nonprice determinants of supply

Definition

number of sellers, technology, resource prices (price of the resources used), taxes and subsidies, expectations of producers, prices of other goods the firm could produce

Term

market

Definition

any arrangement in which buyers and sellers interact to determine the price and quantity of goods and services exchanged

Term

surplus

Definition

a market condition existing at any price where the quantity supplied is greater than the quantity demanded

Term

shortage

Definition

a market condition existing at any price where the quantity supplied is less than the quantity demanded

Term

equilibrium

Definition

a market condition that occurs at any price and quantity where the quantity demanded and the quantity supplied are equal

Term

price system

Definition

a mechanism that uses the forces of supply and demand to create an equilibrium through rising and falling prices

Term

what states that there is an inverse relationship between the price and the quantity demanded ceteris paribus

Definition

law of demand

Term

a movement along a stationary demand curve caused by a change in price is called a

Definition

change in quantity demanded

Term

this is a good consumers buy more of when their income increases

Definition

a normal good

Term

this states that there is a direct relationship between the price and the quantity supplied, ceteris paribus

Definition

law of supply

Term

a movement along a stationary supply curve in response to a change in price is called a

Definition

change in quantity supplied

Term

when the price of a good is greater than the equilibrium price there is an exvess quantity supplied called a

Definition

surplus

Term

the unique price and quantity established at the intersection of the supply and demand curve is called

Definition

equilibrium

Term

this is the supply and demand mechanism which establishes equilibrium through the ability of prices to rise and fall

Definition

price system

Term

this is something that has an inverse relationship between changes in income and its demand curve

Definition

inferior good

Term

this competes with another good for consumer purchases. As a result there is a direct relationship between price change for one good and the demand for its competitor good

Definition

substitute

Term

the principle that there is a direct relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus

Definition

law of supply

Term

any arrangement in which buyers and sellers interact to determine the price and quantity of goods and services exchanged

Definition

the market

Term

this is jointly consumed with another good. as a result there is an inverse relationship between a price change for one good and the demand for its go together good

Definition

complementary good

Term

a market condition existing at any price where the quantity supplied is less than the quantity demanded